Lynas Rare Earths Limited (ASX:LYC) shares are down 20.64% YTD, and compared to some of its’ industry peers has a rather uncommon shareholder composition that may impact volatility to some respect. For a company of its size, LYC finds itself majorly owned by individual retail investors, who hold a commanding 53% of the company’s shares. This level of individual investor involvement hints at a considerable vote of confidence from the public in Lynas Rare Earths’ future prospects in the mining sector but it does provide less of a moat from inside ownership.

A closer look at the company’s shareholder registry reveals an intricate balance of power. Institutional investors maintain significant skin in the game, accounting for 43% of Lynas Rare Earths’ equity. Such a substantial institutional presence is often indicative of credibility in the eyes of the investment community, earmarking the company as one worthy of long-term investment.

Topping the institutional investor list are heavyweights like State Street Global Advisors, Inc. which holds 6.37% of Lynas Rare Earths’ shares (up from 5.2% as per the ASX filing dated 13/03/2024). Hot on its heels are Ausbil Investment Management Limited and BlackRock, Inc., each securing a 5.1% slice of the company’s shares. These top-tier institutional investors solidify Lynas Rare Earths’ standing in the market, adding an element of prestige to its investment profile.

This institutional involvement is accompanied by a rather fragmented ownership pattern among the top 25 shareholders, who together control less than half of the company’s shares. The dispersed nature of ownership suggests a diverse group of small holders rather than a concentrated cabal of investors. This can be both a strength, in terms of broad-based support, and a vulnerability, given the potential for shareholder activism.

In terms of insider stakes, Lynas Rare Earths has a low profile, with insiders holding under 0.4% of the company’s total shares. Retail investors, including the general public, significantly influence the company due to their majority ownership stake, standing at 53% but individual investors can be more prone to selling amid bouts of downward volatility, potentially amplifying said volatility even further.


Top Australian Brokers


Analysts Target Growth From LYC

From an analyst perspective, the 10 firms on file have a consensus ‘buy’ rating, on the back of 6 ‘buys’, 3 ‘holds, and the solitary ‘sell’. The average price target just a shade under $7 represents a potential upside of more than 22%. The high bar is set at $8.50, with the lowest holding a more modest $5 target.

After closing out last week before the extended weekend at $5.69, the consensus among the analyst community provides more room to the upside than down, but plenty will be driven by the underlying fundamentals and how these play out.

So why is the LYC share price down YTD? In short, fundamentals surrounding the rare earth prices. Since the start of the year, rare earth prices have dropped rather considerably, and the LYC price has followed suit. The sentiment surrounding rare earths will need to shift in order for the momentum to change and whether that is to happen in the short to medium term is one of the main questions you should be asking yourself if you are considering Lynas Rare Earth Shares.

The ownership structure of Lynas Rare Earths paints an interesting picture nonetheless, of a company that rests on a bedrock of public trust, bolstered by institutional confidence, with just a splash of corporate influence. Eyes will be on rare earth prices and production levels for an indication of direction before the next earnings, still some 4 months away.